the Customer Center of DFW, Inc. D/B/A Sprint Store by the Customer Center and the Customer Center, Inc. v. RPAI North Richland Hills Davis Limited Partnership ( 2021 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-20-00189-CV
___________________________
THE CUSTOMER CENTER OF DFW INC. D/B/A SPRINT STORE BY THE
CUSTOMER CENTER AND THE CUSTOMER CENTER INC., Appellants
V.
RPAI NORTH RICHLAND HILLS DAVIS LIMITED PARTNERSHIP, Appellee
On Appeal from the 342nd District Court
Tarrant County, Texas
Trial Court No. 342-312627-19
Before Birdwell, Bassel, and Womack, JJ.
Memorandum Opinion by Justice Birdwell
MEMORANDUM OPINION
A landlord sued its tenant for breach of a commercial lease, and the tenant
raised affirmative defenses. The trial court granted summary judgment in favor of the
landlord. We conclude that the tenant’s evidence created a fact issue on its defense of
failure to mitigate, which is enough to defeat summary judgment. We therefore
reverse and remand.
I. BACKGROUND
In 2015, appellant The Customer Center of DFW Inc. (“Tenant”) signed a five-
year lease for a commercial space at a shopping center owned by appellee RPAI
North Richland Hills Davis Limited Partnership. The other appellant, The Customer
Center Inc., signed a guaranty of the lease.
In early 2017, Tenant notified RPAI that it was losing money and asked RPAI
about finding a new tenant. In March 2017, RPAI and Tenant executed a re-leasing
agreement in which RPAI promised to try to find a new tenant, and Tenant promised
to keep making payments in the meantime. But Tenant offered testimony that, over
the years that followed, RPAI’s efforts to find a new tenant were negligible and that
RPAI even took steps to undercut Tenant’s attempt to facilitate the process. In June
2017, Tenant informed RPAI that it would be closing its doors.
In January 2018, RPAI informed Tenant that it had found a replacement
tenant, but RPAI requested a $110,000 fee in exchange for terminating the lease,
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which Tenant refused. In April 2018, Tenant offered two potential tenants who were
willing to take over the lease, but RPAI rejected them without explanation.
In an attempt to salvage the venture, Tenant reopened its store on
September 11, 2018, but it lost money and closed again in March 2019.
RPAI sued Appellants for breach of the lease and the guaranty in October
2019, alleging that they had failed to pay rent since December 2018. RPAI moved for
traditional summary judgment on its claims, relying on a declaration by RPAI’s
property manager that Tenant had stopped paying rent.
Appellants then amended their answer to raise defenses concerning RPAI’s
allegedly poor effort to relet the premises: that RPAI failed to mitigate its damages
and that it materially breached the lease by failing to relet the premises, thus relieving
Appellants of any obligation to pay rent under the lease. Appellants sought to avoid
summary judgment by raising a fact issue on those defenses, relying on an affidavit by
Appellants’ CEO and president Luigi V. Ambrosio. Ambrosio swore to most of the
facts we have recited above.
The trial court granted final summary judgment to RPAI awarding damages of
$74,096.13, attorney’s fees of $3,500, and costs. Appellants appealed.
II. SUMMARY JUDGMENT BURDEN
In their first issue on appeal, Appellants assert that the trial court applied the
wrong standard at summary judgment. Appellants submit that “[w]hen a plaintiff
moves for traditional summary judgment on a defendant’s affirmative defenses, the
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burden is on the plaintiff to come forth with sufficient evidence to conclusively
negate an element of the defendant’s affirmative defenses.” According to Appellants,
it was RPAI’s burden to conclusively negate at least one element of Appellants’
defenses of failure to mitigate and prior material breach.
We take no issue with Appellants’ general statement of the law concerning
situations where a plaintiff moves for traditional summary judgment on a defendant’s
affirmative defenses. “In the context of a plaintiff’s traditional motion for partial
summary judgment to dispose of a defendant’s affirmative defense, a plaintiff may
prevail by conclusively negating at least one element of the defense.” Berry Contracting,
L.P. v. Mann, 549 S.W.3d 314, 322 (Tex. App.—Corpus Christi–Edinburg 2018, pet.
denied).
However, that law does not apply here. RPAI was not using the summary
judgment process to attack Appellants’ affirmative defenses. Rather, RPAI was
moving for summary judgment on its own claims in an attempt to dispose of the case
fully and finally. That being the situation, it was RPAI’s initial burden to conclusively
prove all essential elements of its own contract claim, not to conclusively negate
Appellants’ defenses. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986); Charles
Glen Hyde, Nw. Reg’l Airport, Inc. v. Nw. Reg’l Airport Prop. Owners Ass’n, Inc., 583 S.W.3d
644, 648 (Tex. App.—Fort Worth 2018, pet. denied). A plaintiff satisfies its initial
summary judgment burden if it conclusively proves all essential elements of its cause
of action. Charles Glen Hyde, 583 S.W.3d at 648. Further, we consider the evidence
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presented in the light most favorable to the nonmovant, crediting evidence favorable
to the nonmovant if reasonable jurors could, and disregarding evidence contrary to
the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). Appellants do not dispute
that RPAI carried its initial burden.
If the movant carries its initial burden, “the burden shifts to the nonmovant to
raise a genuine issue of material fact precluding summary judgment.” Lujan v.
Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). Where the nonmovant relies on an
affirmative defense such as mitigation to defeat summary judgment, the nonmovant
has the burden in its summary judgment response to present evidence sufficient to
raise a fact issue on each element of the affirmative defense. See Am. Petrofina, Inc. v.
Allen, 887 S.W.2d 829, 830 (Tex. 1994); H & H Steel Fabricators, Inc. v. Wells Fargo
Equip. Fin., Inc., No. 02-15-00391-CV, 2016 WL 6277371, at *5 (Tex. App.—Fort
Worth Oct. 27, 2016, no pet.) (mem. op.).
The onus with respect to Appellants’ defenses therefore fell on Tenant, not
RPAI. Appellants’ issue arguing to the contrary is overruled.
III. TENANT’S DEFENSES
We next take up Appellants’ third issue, in which they argue that there was a
fact issue on their affirmative defense of failure to mitigate. Appellants argue that
their undisputed evidence concerning RPAI’s poor attempt to relet the premises
should have precluded summary judgment.
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A landlord has a duty to make reasonable efforts to mitigate damages when the
tenant breaches the lease and abandons the property. Tex. Prop. Code Ann.
§ 91.006(a); Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293, 299
(Tex. 1997) (op. on reh’g); Hoppenstein Props., Inc. v. Schober, 329 S.W.3d 846, 849 (Tex.
App.—Fort Worth 2010, no pet.). “A landlord should not be allowed to collect rent
from an abandoning tenant when the landlord can, by reasonable efforts, relet the
premises and avoid incurring some damages.” Austin Hill Country, 948 S.W.2d at 299.
“The landlord’s failure to use reasonable efforts to mitigate damages bars the
landlord’s recovery against the breaching tenant only to the extent that damages
reasonably could have been avoided.” Hoppenstein, 329 S.W.3d at 849. However, the
landlord is not required to simply fill the premises with any willing tenant; the
replacement tenant must be suitable under the circumstances. Id.“A tenant’s assertion that a landlord failed to mitigate damages is an affirmative
defense.” Id. Thus, the tenant bears the burden to demonstrate that the landlord has
failed to mitigate damages and the amount by which the landlord could have reduced
its damages. Austin Hill Country, 948 S.W.2d at 299. The duty to mitigate is designed
“to discourage the waste that results when a party sits still and lets damages pile up
when reasonable steps would prevent further loss,” Mellema v. Cargill, Inc., No. 05-92-
00375-CV, 1993 WL 58518, at *6 (Tex. App.—Dallas Feb. 26, 1993, no writ) (not
designated for publication), rather than to “penalize the mitigating party for not doing
enough.” Hoppenstein, 329 S.W.3d at 850.
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Appellants offered some evidence of RPAI’s failure to make reasonable efforts
to mitigate damages, as well as the amount of damages that could potentially have
been avoided through mitigation. Viewed in the light most favorable to Appellants,
the record establishes the following:
• In the 2015 lease, RPAI pledged to make “good faith,” “commercially
reasonable efforts” to find a replacement tenant in the event of a default by
Tenant;
• In March 2017, RPAI renewed that promise in the “Re-Leasing Agreement”
after Tenant notified RPAI that it was closing its store with 42 months left on
the lease;
• RPAI failed to locate a new tenant over the next three-and-a-half years;
• That failure was attributable to RPAI’s refusal to take minimum efforts to find
a replacement tenant, such as by declining to show on its website that the
premises were available, despite multiple requests from Tenant;
• RPAI also barred Tenant from displaying a “for rent” sign to assist in the
reletting process;
• In January 2018, RPAI notified Tenant that it had located a replacement tenant,
but in exchange for terminating the lease, it demanded a $110,000 fee from
Tenant that was not contemplated by the parties’ agreements;
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• Based on the timetable of events and the terms of the lease, it is evident that if
RPAI had reasonably accepted the new tenant in January 2018 instead of trying
to extract an additional payment from Tenant, RPAI could have potentially
mitigated roughly $90,000 in damages, which represents the remaining twenty-
one monthly payments on the lease after Tenant stopped paying rent in
December 2018;
• In April 2018, Tenant brought to RPAI’s attention two more suitable
replacement tenants who were willing to take over the existing lease, but RPAI
rejected both without explanation; and
• Had RPAI reasonably accepted either one of the proposed tenants in April
2018, it would have mitigated roughly $90,000 in damages.1
1
Luigi Ambrosio’s affidavit was the source of most of this evidence, but RPAI
maintains that his affidavit is conclusory and therefore no good as summary judgment
evidence. See Atmos Energy Corp. v. Paul, 598 S.W.3d 431, 467 (Tex. App.—Fort
Worth 2020, no pet.). We disagree. “A conclusory statement is one that does not
provide the underlying facts to support the conclusion.” Gaber v. U.S. Bank Nat’l
Ass’n as Tr. for Truman 2016 Title Tr., No. 02-19-00243-CV, 2020 WL 5242419, at *4
(Tex. App.—Fort Worth Sept. 3, 2020, pet. denied) (mem. op.) (quoting Residential
Dynamics, LLC v. Loveless, 186 S.W.3d 192, 198 (Tex. App.—Fort Worth 2006, no
pet.)). Ambrosio’s affidavit is composed of hard factual matter, not vague
declarations parroting the elements. He provided specific facts to substantiate the
elements, with a detailed timeline of the ways in which RPAI refused to reasonably
pursue mitigation.
RPAI also attacks the affidavit in another way: it contends that Ambrosio
failed to demonstrate the basis of his personal knowledge. See Kerlin v. Arias, 274
S.W.3d 666, 668 (Tex. 2008) (per curiam). Again, we differ in our estimation of the
affidavit. “[A] person’s position or job responsibilities can peculiarly qualify [him] to
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We believe that despite Appellants’ inability to pinpoint the exact amount of
damages that could have been avoided, the above evidence nonetheless gives rise to a
fact issue on failure to mitigate, as is shown by Hygeia Dairy Co. v. Gonzalez, 994
S.W.2d 220 (Tex. App.—San Antonio 1999, no pet.) (en banc op. on reh’g). There, a
dairy sold fifty-one head of cattle to a rancher, but unbeknownst to the rancher, the
cattle were diseased. Id. at 222. The rancher’s stock began to die off in 1993, forcing
him to liquidate his entire herd in late 1994, and he sued the dairy. Id. The dairy
pleaded the defense of failure to mitigate; it argued and proffered evidence that when
the rancher started to lose cattle, he should have tested the dead and dying animals to
determine exactly what was causing the deaths. Id. at 224. Nonetheless, the trial court
refused to submit the mitigation issue to the jury. Id. On appeal, the court agreed the
trial court should have submitted the mitigation issue to the jury, even though the
dairy’s trial evidence did not “prove the exact amount of damages attributable to” the
rancher’s neglect. Id. at 225. “We believe the law does not require such a showing,
especially when the damages themselves are unliquidated.” Id. Rather, the court
have personal knowledge of facts and establish how [he] learned of the facts.” Goins
v. Discover Bank, No. 02-20-00128-CV, 2021 WL 1136077, at *2 (Tex. App.—Fort
Worth Mar. 25, 2021, no pet. h.) (mem. op. on reh’g) (citing Boswell v. Farm & Home
Sav. Ass’n, 894 S.W.2d 761, 768 (Tex. App.—Fort Worth 1994, writ denied)).
Ambrosio explained that he was president and CEO of Tenant, and much of his
affidavit’s factual content was framed in the first person; it was largely a sworn
account of things that he said and did with respect to RPAI, as well as things that
RPAI’s managers said and did in return. Ambrosio’s position and his role in
overseeing these events on Appellants’ behalf establish the basis of his personal
knowledge.
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concluded, “Mitigation of damages is ordinarily a question of fact for the jury,” 2 and
to create a fact issue for the jury, the defendant need only produce some evidence
“from which the jury can make a reasoned calculation about losses from failure to
mitigate.” Id. at 224, 226. The court held that this standard was satisfied by the
general evidence concerning the cost of the replacement cattle and the value of the
rancher’s herd. Id. at 226.
Likewise, in this case, Appellants made an imprecise record concerning the
exact amount that RPAI could have mitigated through reasonable efforts. Still, as
with Hygeia, we hold that the evidence is sufficient to give rise to a fact issue on the
defense of failure to mitigate. There was evidence of RPAI’s delinquent efforts to
relet the premises. There was also proof concerning the value and term of the lease,
along with the evidence that if RPAI had acted reasonably with respect to any of the
potential tenants in early 2018, this could have saved nearly two years’ worth of
payments on the lease, to the tune of over $90,000. This is enough to survive
summary judgment. See id.
Because Appellants have offered evidence sufficient to raise a fact issue on
each element of its failure-to-mitigate defense, summary judgment was improper.
See Am. Petrofina, 887 S.W.2d at 830. We sustain Appellants’ third issue, which renders
it unnecessary to consider Appellants’ second issue.
2
See also White v. Harrison, 390 S.W.3d 666, 675 (Tex. App.—Dallas 2012, no
pet.) (“The reasonableness of the landlord’s efforts to avoid damages is an issue for
the fact finder.”).
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IV. CONCLUSION
We reverse the trial court’s judgment and remand for further proceedings
consistent with this opinion.
/s/ Wade Birdwell
Wade Birdwell
Justice
Delivered: May 27, 2021
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